Transbus International Ltd, Re

Administrators appointed under Schedule B1 to the Insolvency Act 1986 may sell a company’s assets before creditors approve their proposals. They do not require a prior court direction merely because the proposals remain unapproved. The requirement in paragraph 68(2) to comply with court directions applies if directions are given. This construction reflects the statutory policy of reducing court involvement and maintaining administration as a flexible and comparatively informal alternative to liquidation.

The administrators of Transbus International Ltd applied for directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986. The question was whether they could sell the company’s assets before creditors approved their proposals, or whether a court direction was first required. The court considered the amended statutory scheme and the earlier decision in Re T&D Industries plc [2000] 1 WLR 646, which had construed the former provisions as not requiring prior court approval.

1. Application granted in substance. Administrators may sell company assets before creditors have approved their proposals and do not need to obtain a prior direction from the court.
2. Paragraph 59(1) of Schedule B1 permits an administrator to do anything necessary or expedient for managing the company’s affairs, business and property. Paragraph 60 gives the administrator the powers specified in Schedule 1 to the Insolvency Act 1986.
3. Paragraph 68(1), which requires the administrator to manage the company in accordance with approved proposals, does not prohibit all action before proposals are approved. The reference in paragraph 68(2) to compliance with court directions applies where the court gives directions; it does not make a prior direction a precondition to acting.
4. The court adopted the reasoning in Re T&D Industries plc [2000] 1 WLR 646. The amended wording deliberately mirrors the interpretation previously given to the former statutory provisions. The same policy considerations remain relevant: administration is intended to be a more flexible, cheaper and comparatively informal alternative to liquidation.
5. A contrary construction would prevent administrators from performing functions before approval of proposals and could require court directions throughout administrations in which no proposals need be laid. That would conflict with the Enterprise Act 2002 policy of reducing court involvement where possible.

First-instance decision. No prior appellate history is stated in the judgment.